Authors

Document Type

Article

Publication Date

2009

Department

Management and International Business

Abstract

Purpose - Over the past decade, channels researchers have devoted considerable attention to a potential shift in the balance of power in retailer-manufacturer relationships. At the same time, a burgeoning body of supply chain research, largely overlooked by marketing researchers, has emerged promoting the benefits of cooperation in technology-enabled supply chain integration. This study aims to investigate the confluence of these streams. Specifically it aims to consider the effects of retailer supply chain technology mandates on supplier financial performance. Design/methodology/approach - The design and method is a secondary data event analysis including cross-sectional regression analysis. Findings - The event analysis findings indicate suppliers affected by Wal-Mart's 2003 RFID mandate experienced net gains in abnormal stock returns. Subsequent cross-sectional regression analysis show abnormal returns were stronger for suppliers with greater cash flow and for more dependent suppliers. Practical implications - Study results suggested firms with stronger cash flows are better able to absorb the unexpected costs of complying with the retailer mandate. Additionally, the findings indicate mandate-associated positive abnormal returns were more pronounced for suppliers with a larger percentage of sales through the Wal-Mart channel. This means that a dependent supplier that follow technology mandates by power retailers will potentially receive above average stock returns. Originality/value - This paper is believed to be the first to address the impact of technology mandates in the supply chain.